Solving New Challenges with Old Solutions

Have you ever bought a product with the hopes of solving a problem, and then realized that the product can actually do so much more than you initially thought? Maybe it’s a new blow dryer, that actually comes with an attachment to curl your hair, saving you an extra 30 minutes before work in the morning. Or maybe it’s your new cast-iron skillet, which you initially purchased to cook up some steaks—but now you realize it actually serves as an amazing tool to make deep-dish cookie skillets. Whatever the product may be, it’s always nice to learn that something you’ve already spent your money on can solve new or existing challenges.

We’ve all seen the headlines about potential economic turmoil on the horizon—economists are predicting a recession, which in turn has employers and employees alike pondering just how they can save on costs without sacrificing their quality of life, workplace, or otherwise.

The good news is, much like our new blow dryer and cast iron skillet, most businesses already have a critical tool in place that, with a little restrategizing, can combat this new economic challenge: Employee benefits. In this blog, we’re going to take a look at how you can rethink your approach to employee benefits and do more with less to solve for the cost-related challenges brought on by the great resignation, rising inflation, the lingering Covid-19 pandemic, and more.

Setting the Economic Scene

If you’ll indulge us for just a moment, let’s take a minute to set the scene of the economic backdrop in America. The timeline below highlights the unfortunate reality that every American has lived through the past two years. Click any point on the timeline below to explore the past 2 years:

The Employer Impact

Benefits make up a large percentage of employer costs. According to the U.S. Department of Labor, of the total compensation employers pay to each employee, benefits make up 31%. And these costs will only be exacerbated by the continuous increase in healthcare costs—research shows that over the past decade, the average employer healthcare contribution increased from $9,773 to $15,574, or about 55%. With inflation impacting the cost of healthcare across the nation, these numbers continue to rise.

On top of that, The Great Resignation has employees fleeing their jobs to find roles that offer higher pay and better benefits. March 2022 brought a new record- with 4.53 million workers quitting their jobs in that month alone. Employers are being pressured to pay higher wages and offer more comprehensive benefits packages in order to keep up with the competition. Investopedia reported that when you tack on the cost of benefits, a new hire’s salary can cost an employer anywhere from 1.25 to 1.4 times the base salary—meaning if an employer hires an employee at a base salary of 60,000, this might actually cost between 75,000-84,000 per year.

All this to say, it is a costly time to be an employer right now. Healthcare costs are going up, employees are demanding better pay and benefits, and HR teams are needing to find a way to do more with less.

The Employee Impact

As many of you reading this blog post are employees, I don’t need to tell you that for employees in America, healthcare is costly. Recent research found that deductibles have increased 25% over the past 5 years, and 79% over the last ten years. The findings also indicate that over the past 5 years, the average premium has increased 22%, and have increased 54% over the last decade—this increase is significantly more than workers’ wages or inflation.

After years of living through a global pandemic, healthcare spending is accounting for a large percentage of household spending.

In 2022, the cost of healthcare for a hypothetical American family of four covered by an average employer-sponsored preferred provider organization (PPO) plan was reportedly $30,260, according to the Milliman Medical Index (MMI). And for reference, the most recent median household income reported by the census is $67,521.

Employees are feeling the struggle. Our recent survey found that healthcare is the 4th most-felt category when it comes to inflation driven cost-increases—just behind gas, groceries, rent, and utilities.

All this to say, this is a difficult time for employers and employees alike. If HR teams can optimize healthcare spending for both businesses and individual employees, it’ll make a wallet-saving difference going into a potential recession.

3 Keys to a Revamped Benefits Strategy

Focus on driving up participation in EAPs, Digital Health Solutions, and Voluntary Benefits

We know—easier said than done. But if HR teams can increase employee participation rates in non-traditional benefits plans, employees can feel more confident in the health and financial implications of their benefits, and save on healthcare costs in the long run. The problem is, when employers say “enroll in additional plans” most employee's actually hear “spend more money on healthcare.” No one wants to see additional dollars coming out of their paychecks each month, but the fact of the matter is that 65% of employees across America have experienced an unplanned medical event or emergency, and as a result, 63% of them have faced significant medical expenses and debt. This medical debt can be avoided or at least mitigated by enrollment in the proper preventative plans.

So, how can HR teams guide employees to enrollment in additional benefits plans? The key is education. Comprehensive benefits education can unlock understanding and confidence during enrollment. Employees need to understand not only what their options are, but key factors like how they’ve spent on healthcare in the past, how different plans can impact their ability to manage new or existing conditions, whether or not the plans they choose will cost them tremendously if they want to visit preferred providers, and so on. This requires a new type of education from HR teams, and unfortunately, the status quo of benefits lunch and learns and PDF takeaways will no longer cut it.

Enrolling in the right voluntary plans can protect employees from rising deductibles, surprise medical bills, and out-of-network spending.

Emphasize the benefits of High Deductible Health Plans

This key goes hand in hand with the previous, the ticket here again being a need for enhanced benefits education. Many employees don’t understand the benefits of high deductible health plans, and therefore neglect to enroll in these plans. The name in itself brings fear—even those employees with little benefits understanding typically know that a deductible is what you have to pay before your benefits kick in. So hearing “high deductible” immediately has employees thinking “I have to pay more before I can start reaping the benefits of my…benefits?”

The goal here is to provide benefits education early enough to prevent that fear before it even arises. While yes, HDHPs mean paying more out-of-pocket for care up front, they also usually have lower monthly premiums. Meaning, less money out of the employee’s paycheck each month. HDHPs can also be combined with health savings accounts (HSAs) which enable these employees to make tax-free contributions that can later be used for their deductible or medical costs. In the long run, HDHPs can ensure that employees who are cost-conscious are not over-insuring themselves.

HDHPs can be beneficial to employees and employers alike. For employers, an HDHP option is often less expensive, and the higher patient cost-sharing means employees will typically “shop around” prior to making big decisions about their healthcare utilization.

What’s important to remind employees is that the “right” or “best” benefits plans will vary from employee to employee. Everyone has different health and financial backgrounds, family structures, and wellness goals. This means that whatever the “best” plan is for one employee, might not be the best option for the next. A focus on education around the implications of each type of plan and potential scenario-planning is critical for cost-conscious employees and employers this open enrollment season.

Reduce administrative burden on HR teams

The best possible way to do more with less (read: get more done with your existing budget and staff) is to find ways to reduce administrative burden on your HR teams. A lot of HR work requires a personal touch, but the tasks that can be automated, should be automated.

Take open enrollment for example. Our recent research found that almost half of all HR leaders are spending 40% or more of their time during OE on employee education and answering employee questions. For some quick math: if the entire OE process (planning, prepping, educating, communicating, follow up, etc.) lasts 8 weeks, and a typical work week is 40 hours, this would mean that HR leaders are spending at least 128 hours on developing and communicating benefits education over those 8 weeks. By simply offloading and streamlining benefits education, HR leaders can get 16 full days back during open enrollment. If that’s not a way to do more with less, I don’t know what is.

“So, you just told me I need to improve the way I’m educating employees, provide each employee with a comprehensive, personalized education, but also somehow offload education and open enrollment comms from HR’s workload? That’s impossible.” - You, probably.

Enter: Nayya

Nayya’s AI-driven benefits experience platform guides employees through an easy-to-use, step-by-step enrollment process. Each individual employee is taken through their own unique journey that analyzes their health and financial profile to educate the employee on which plans best match their goals. The technology then creates and suggests personalized benefits bundles that align entirely with the employee and their dependents’ needs.

Scenario planning empowers the employee to explore voluntary benefit options and how new or existing health conditions may affect them financially. Planning a pregnancy? See what plans align best with your OBGYN needs. Managing Type 2 diabetes? Ensure that the plans you choose include your preferred providers in-network and cover the cost of your medication. Want to ensure you have X amount in your savings account by the end of the year? Nayya will help you find the right percentage to deduct from each paycheck.

When Pegasus Senior Living brought in Nayya, the team saw:

• An increase in enrollment for voluntary plans: A 41% increase in Critical Illness enrollment, and 31% of employees enrolled in accident insurance.
• An increase in enrollment of HDHPs- Nayya successfully helped the Pegasus Senior Living HR team communicate the value of an HDHP plan and spread awareness. 22% of employees moved to an HDHP plan in the very first year of it being offered.
• And despite headcount increasing, Nayya’s guidance decreased per-employee medical costs and significantly decreased HR admin burden during enrollment

We understand that managing benefits for an organization of any size is no easy task. Driving participation, engagement, and education is a universal challenge faced by all HR teams. Our platform is built to address these challenges and give you some time back so that you can finally do more with less.